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Stock Market News for Aug 27, 2021

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U.S. stock markets closed lower on Thursday reversing a five-day winning streak. Investors remained shaky ahead of Fed’s big economic event this week. Geopolitical disturbances in Afghanistan also dented market participants’ confidence. All three major stock indexes ended in red.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.5% or 192.38 points to close at 35,213.92, terminating the blue-chip index’s four-day winning streak. Notably, 4 components of the 30-stock index ended in the green while 26 in red.

Moreover, the tech-heavy Nasdaq Composite finished at 14,945.81, sliding 0.6% due to weak performance by large-cap stocks. This marked the end of the tech-laden index’s five-day winning run.

Meanwhile, the S&P 500 moved down 0.6% to end at 4,469.92, marking the end of a rally for five consecutive sessions. The Energy Select Sector SPDR (XLE) dropped 1.5%. Ten out of eleven sectors of the benchmark index closed in negative territory while one in green.

The fear-gauge CBOE Volatility Index (VIX) was up 12.2% to 18.84. A total of 8.27 billion shares were traded on Thursday, lower than the last 20-session average of 8.96 billion. Decliners outnumbered advancers on the NYSE by a 2.99-to-1 ratio. On Nasdaq, a 1.83-to-1 ratio favored declining issues.

Fed’s Big Event in Focus

Fed officials to meet virtually for a 2-day Jackson Hole symposium, Wyo, starting Aug 26. On Aug 27, Fed Chairman Jerome Powell will address the nation about the decision taken in the symposium. Investors will keenly watch the event to gauge the mood of the majority Fed officials regarding the central bank’s ultra-dovish monetary policies that it has adopted at the onset of the global outbreak of coronavirus in March 2020.

Market participants will try to derive any signal for the Fed about the tapering of its existing $120 billion per month bond-buy program any time soon. The minutes of the latest FOMC meeting conducted in June revealed increasing numbers of Fed officials are now in favor of tapering this year.

Geopolitical Disturbances

On Aug 26, two explosions took place outside the Kabul airport in Afghanistan in which several U.S. defense personnel have died. Geopolitical disturbances dented market participants’ confidence on risky assets like equities. As investors reallocated their funds to safe-haven government bonds, the yield on the benchmark 10-Year U.S. treasury Note rose as high as 1.375%.

Sector wise, the oil and energy sector suffered the most. Airlines and leisure-travel operators have also suffered.  Consequently, shares of Diamondback Energy Inc. (FANG - Free Report) and Occidental Petroleum Corp. (OXY - Free Report) fell 2.6% each. Both stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

The Department of Labor reported that weekly jobless claims rose 4,000 to 353,000 for the week ended Aug 21. The consensus estimate was 345,000. Previous week’s data was revised upward from 348,000 to 349,000. Continuing claims (those who have already received benefits) fell 3,000 to 2.86 million for the week ended Aug 14.

The four-week moving average that smoothed out weekly fluctuations, dropped 11,500 to 366,500, marking the lowest since March 2020. As of Aug 7, around 12 million people were reportedly receiving benefits through eight separate state or federal programs, marking am increase of 182,000 from the previous week.

The Department of Commerce reported that the U.S. GDP for second-quarter 2021 was revised upward to 6.6% from 6.5% reported earlier. However, the consensus estimate was 6.7%.


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